Posted
by
Soulskillon Wednesday March 26, 2014 @02:02PM
from the couldn't-have-been-an-accident dept.

Slashdot contributor Bennett Haselton writes:
"Why do Netflix and a few other companies keep the DVD format alive, when streaming is more convenient for almost all users? The answer is not obvious, but my best theory is that it has to do with what economists call price discrimination. Netflix is still the cheapest legal way to watch a dozen recent releases every month — but only if you're willing to put up with those clunky DVDs."
Read on for the rest of Bennett's thoughts.

I was noodling around Best Buy looking for a new laptop, and it occurred to me how inconvenient it was that I was limiting myself to models with DVD players. Either that,
or thinking what a pain it would be having to take an external DVD player everywhere that I might want to watch a movie on my laptop. Then I started to wonder why this was.

Specifically: Why do movie studios allow Netflix to send out DVDs to their subscribers by mail, but not to allow the same option in the form of "virtual DVDs" that you could
"check out" through their website, and stream them while they're checked out to you? Surely the streaming option is more convenient for almost everybody — no postage fees, no opening and sealing of envelopes on Netflix's end, no dealing with lost and scratched DVDs, etc.

Well, obviously movie studios would not allow Netflix to let users "check out" a virtual DVD, stream it, and then "return" it and instantly "check out" the next virtual DVD in their queue, since this effectively amounts to unlimited simultaneous access to all of their titles. (That's now Netflix's huge online streaming library works, but movie studios don't currently want to make all of their movies available for instant streaming.)

But then why not take all the movies that are currently only available as DVDs (not for streaming), make them available as "virtual DVDs", and only allow users to check out a certain number per month? This would mimic the limit imposed by the speed of the postal service, which only allows users to check out a fixed number of movies per month by mail. Netflix could keep its existing streaming library the way it is, and for the movies currently available only as physical rental DVDs, replace them with "virtual DVDs" that would count towards a user's monthly virtual DVD limit. Why won't movie studios let them do that?

Well actually, there's still a clear reason why movie studios would not allow this: a certain amount of revenue comes from impulse buys from users who decide that they want to watch The Dark Knight Rises right now and rent it from Google Play. (That's how I broke in my setup for holding a tablet in front of an elliptical while exercising, and worked out for the entire length of the movie to assuage my guilt from pigging out at a party.) If Netflix allowed instant checkout of virtual DVDs, the studio would lose the $5 or more that it makes when a user decides to rent a recently released blockbuster. (The studio would still get a cut of the money the user pays to Netflix for the virtual DVD plan, but not as much -- about $12 per month divided by about 12 DVDs.)

So, finally, suppose Netflix built this limitation into the virtual DVD plan as well — you could have a "virtual DVD" queue, with two or three virtual DVDs "checked out" at any one time, and every time you "returned" a virtual DVD, there would be a delay of 24 hours or more before the next DVD in the queue would be "checked out" to you. So the virtual DVD queue would essentially mimic Netflix's existing experience of renting DVDs by mail, except the content would be streamed, so you could watch it on any device with an Internet connection.

Now we have a fairly interesting question. If what I've described would be essentially "the same thing" as Netflix's existing DVD plan — except replacing physical DVDs with streaming, which would be more convenient for all parties involved — then why won't movie studios allow them to do that? Of course movie studios don't want their own DVD sales being undermined, but they already allow Netflix to "compete" with the studios own DVD sales by offering physical DVDs for rent, so why wouldn't they allow them to offer virtual DVDs for rent in exactly the same way?

I'm interested in questions like these which seem to have an obvious answer, but the obvious answer is a decoy which turns out to be wrong, and the real answer is necessarily more complicated. In this case, the obvious answer is that studios don't allow Netflix users to check out "virtual streaming DVDs" because it would compete with their own DVD sales. But that answer by itself can't be right, because studios do allow Netflix users to check out physical DVDs, which also compete with the studio's own DVD sales. So what could be their reason for allowing users to check out physical DVDs but not to "check out" virtual DVDs in exactly the same way, where studios would get the exact same cut of the rental rates as if they were real physical DVDs being checked out?

Unfortunately, by the very nature of these decoy-answer-making-a-deeper-mystery questions, if you ask them in a forum or on a mailing list, you'll get people spelling out the decoy answer for you with what they imagine to be the patience of someone talking to an idiot. Wherever I posed this question, I got the answer that studios wouldn't allow virtual DVD checkouts because it would undermine their own DVD sales. To repeat, the question is why the studios allow physical DVD check-outs from a service like Netflix but do not allow virtual DVD check-outs that would otherwise work in exactly the same way, with Netflix and the studios getting paid the same in each case.

One possible answer is that this is a form of price discrimination, whereby a seller tries to extract the most that different market segments will pay for essentially the same product. Student discounts for museum admission are a form of price discrimination — extracting more money from non-student adults who have more disposable income, while still gaining some revenue from poorer students who otherwise would have skipped the experience and paid nothing. In cases where a seller can't check a buyer's income level (or student status) directly, they can practice price discrimination by throwing up some sort of inconvenient roadblock — requiring buyers to clip a coupon or mail in a rebate to get a discount. Busy, high-earning professionals often won't bother, and will end up paying the higher price, while price-conscious bargain hunters will take advantage of the deal when they otherwise might not have bought the product at all. (On the other hand, a restaurant charging more for steak than chicken is not "price discrimination," because the steak really does cost the restaurant more to provide.)

In the case of a Netflix DVD plan, if you watch movies and mail them back as fast as you can on a plan that lets you check out 2 DVDs at a time, every month you could watch about 20 movies for a monthly fee of $12. If you rented the same recent releases on Google Play at $2-$5 a pop, it would average around $70.

So this could be a form of price discrimination by the studios. If you care about price more than convenience, you can just splurge for a Google Play rental whenever you want to watch a recent release, and you can watch it on your laptop, your tablet, or your phone, without the need for a DVD drive, but you'll pay around $70 per month depending on how many movies you watch. On the other hand, if you want to save money, the cheapest legal way to watch all new releases as soon as they're released to home media, is with a Netflix DVD checkout plan — but the inconvenient roadblock is that you have to be willing to deal with those clunky DVDs.

It's an odd explanation, but it's hard to think of any other reason why Netflix and the movie studios would keep propping up the DVD format, when it would be easier for them and for us to just offer "virtual DVD checkout" and stream the same content, as long as Netflix and the studios got paid exactly the same amount of money as they would make when we watch the content on a physical DVD. The inconvenience of DVDs allows Netflix and the studios to price-discriminate and separate the wealthy from the price-conscious, and extract money accordingly from each group — especially when higher-income users are more likely to own tablets or DVD-free laptops, and lower-income users are more likely to own DVD players. Can you think of any other reason why they don't simply replace all DVDs with comparable streaming "checkout" options?

Well actually, I can think of at least one other possibility. With a "virtual DVD checkout" plan like the one I described, users might feel some aggravation every time they add a virtual DVD to their queue, only to be told they have to wait 24 hours or more before they can watch it. With physical DVDs, such delays are caused by the postal service and by the physical impossibility of having a DVD show up instantly in your home. But under a virtual DVD checkout plan, despite the fact that it would be more convenient overall, the delay before you can watch a checked-out movie is imposed by Netflix (possibly at the insistence of the movie studio), so that might be where the user focuses their aggravation instead. It's conceivable that even though Netflix knows that a "virtual DVD checkout" plan would be more convenient for users, those users would irrationally come to resent Netflix more for imposing the delays on movie viewing, so the company just decides not to wade into those waters.

I'd be interested in hearing other theories, as long as people understand the question: Why movie studios don't allow movies to be streamed in a manner that mimics, as closely as possible, the experience of checking out DVDs by mail from Netflix (including, say, a mandatory delay between the time you select the movie and the time that you can watch it). Saying "Because it competes with their own DVD sales" is not an answer, since Netflix's physical DVDs also compete with a studio's own DVD sales. But there may be other answers that are actual answers, and maybe one of those is the answer.

It's probably because content providers are worried that someone will figure out a way to rip the netflix stream while they're confident that the physical medium will provide an adequate protection scheme using DRM while the truth is probably the reverse.

For one thing, until US networks get a LOT better, the quality of a physical Blueray absolutely annihilates streaming here.

Neither DVDs or Bluerays suffer from your local ISP suddenly going offline, or a nearby hospital deciding to have a hires video conference between many points. No stuttering, no crashing (hello, Roku... you ever going to fix that crashing bug in your players?)

And, if we can talk about ownership here, each DVD/Blueray is a physical object which isolates risk of damage to one title at a time (as compared to a library on HD or in the cloud), and eliminates a third party who has decisive control over what you (think you) own, and how you can use it, in the "cloud."

And, like LPs before them, CDs, DVDs, Bluerays... the packaging often contains much interesting and collectable goodness. Or is such goodness in and of itself.

And, you can loan out a CD/DVD/Blueray, Swap them. Treat them as if, you know, you owned them. What an amazing idea, eh?

Just as a fer-instance, we've been watching Vikings, streamed from the History channel. We really enjoy the show. It starts in lowres; jerks into hires. Stutters and goes back to lores. Breaks for commercials. Swaps into hires without, apparently, properly telling the system it's changing, judging by the spattering of random looking mpeggy squares on screen when it's changing res. And the commercials appear to have been shot in CDV or something... "lores" hardly suffices to describe them. Basically, other than the content itself, the whole "streaming experience" there is totally bottom feeder. This is pretty much a worst case, but it's not all *that* uncommon, and many audio streams are also extremely low quality.

The CD/DVD/Blueray collection, however... impeccable. Just as good today as each title was when we bought the stuff. Given the new upscalers, perhaps even better.

CDs, same thing, really. There are a few good streams on Internet radio, but generally... not so much. 128k streams... meh. 192 is tolerable, 320 is more like it. OTOH, a good CD (for example, one from Telarc) always sounds *X*awesome*X*, and will for decades, perhaps longer.

Maybe my standards are just head and shoulders too high, but that's why *I* am still not all hepped up on streaming.

Yep, that's why I love Netflix DVDs/bluray. Very high quality, no (effective) DRM. Sadly, Netflix is letting its DVD business die. I commonly get DVDS 20+ up my queue shipped to me as the first 20 aren't available to ship (with no warning or "short wait" notice, of course, as Netflix just doesn't care). They have TV shows where some seasons are DVD-only, and some are Bluray-only (when both formats are for sale for all seasons - Netflix just doesn't care).

Of course it all points back to exploiting the patents of flash ram for as long as possible prior to reducing the price where it competes with optical storage both media and player. They can already fit ten full high definition movies in something the size of your thumbnail and it is only patent inflated profit margins on flash keeping optical storage alive. They could basically send you a huge chunk of the whole library in something the volume of a dvd/blue ray case and rather than stream the content you

I agree, but I'd guess that it's actually that the agreements the studios made change slower than the market does: they're locked into the DVD agreement for various contracts with netflix, writers, actors, directors etc.

The inconvenient nature of DVDs compared to streaming probably IS the reason DVDs are released first, but I'm guessing if it weren't for the slow-to-change contracts, they'd do away with the DVD releases and just go to streaming a long time after release. That would satisfy their concern

Sure content providers may not always know what's going on, but they are most certainly not so out of touch as to think that ripping steams is a real concern. Well, maybe in so far as an end user tool to save the stream might be a threat, but realistically DVD and BR are easily rippable and better quality so I doubt the concern is that great.

It's not about what content providers are worried about, it's about what content providers have control over. They can't do anything about Netflix buying DVDs and shipping them out. But they can control Netflix's streaming their content, even if there are artificial limitations like the ones suggested. As long as content producers are given a say in the matter, they'll say no to anything that makes Netflix a "one-stop shop" for customers to get their content. Sure, they'll license a part of their catalog to Netflix to stream (mostly TV), but they don't want their full catalog available online. It's an obsessive control thing, not a fear of piracy. Piracy has always been a red herring...it's always been about control.

And it's about content producers being short-sighted, just like they have been all along. The best thing that could happen to both Netflix and the content producers would be to introduce compulsory licensing fees ala what CARP set for streaming music. The industry as a whole needs to move away from the notion of maximizing their profit on a per-view basis and move to a strategy of maximizing their per-user, per-month profit. If the average person spends $x/mo watching media, be it TV, movies or whatever, the goal of the industry should be to raise that number and they should be willing to give customers unlimited content as the carrot for paying more. That way, everyone wins.

Along the lines of the focus on maximizing per-view revenue and not per-month revenue is the love-affair the entertainment industry has with exclusive contracts. You can buy this show on this service, or that show on that service, or you can stream this show only if you have a cable subscription to this channel, but only for one season, and so on. Often things are hard to buy at any price, and sometimes you can only get much of what you want if you subscribe to 3 different services (thus pay

Its because we don't all live in NYC or LA and therefor don't have endless bandwidth?

I guess the author lives in a bubble and has never left his little comfy megacity but in the rest of the country? yeah you see we have these things called "bandwidth caps" that can be as low as 35Gb, that is if you can get high speed at all.

You see thanks to having a broken corrupted system that has been on the skids for quite awhile there is a nice scam where there is no competition in a good 70%+ of the country. In those places you get a DSL system that has been practically abandoned (because the phone company is making mad bank of those cell towers and could give a fuck about those old DSL setups, can't nickel and dime them to death like the mobile customers) and if you are VERY lucky you can be assraped by cable which is very fast but raises your rates every time someone gets tired of their jacking up the prices on movie channels. Oh and BOTH sides cherry pick and really don't give a fuck about poor or non whites so in many places you can have cable and/or DSL literally across the street and not be able to get anything but dialup. Racism and classism, don't ya just love it?

So to kill DVD would be to kill a good chunk of their sales as many just can't get high speed or have such high caps that they would have the choice between watching a movie or having dinner thanks to the insane overage charges. Blu Ray looks to never be anything more than a niche, in fact the people I know with BD players use them more for DVD than they do for BD, so like it or not oh sheltered writer of TFA the DVD is gonna be here for a loooong time.

Also, old people. Yes old people have netflix, I'm 47, I have in previous decades hacked/copied/pirated everything/had the coolest fastest/newest/most slashes/best home entertainment stuff. But I got old, I care a lot less about that crap now and my primary movie watching device and television that has a fucking tube, and it has a DVD player plugged into it, and when I get netflix or redbox movies and can toss them in and watch them. I don't want to watch them on my phone, or my pc or my tablet. Because I a

I've developed a certain sensitivity to Bennett stories: if the summary asks a stupid question that can easily be answered with a little thought, I check the submitter's name. Bingo. In this case, the answer is legacy business and the difficulty of negotiating contracts across publishers. End of story.

It's Netflix. It's not going to look that great on your 70" TV anyways. '-p

Every glitch in the stream caused by network congestion or rogue garden gnomes is going to show up in the end result. You will get to snicker at Netflix, your ISP, and the FCC every time you watch it again.

If you knew a little bit about how macrovision worked, you'd be able to reason why your "fun fact" doesn't make logical sense. So let me give you some details

1) Most VCRs (I'm not sure if this was always the case or only in later years) contain an automatic gain control in the recording mechanism. The AGC would try to adjust the picture brightness based on the signal it received, so that what you recorded would be neither too dark nor too bright. I'm not familiar with the exact mechanisms they use to calculate how much adjustment to apply. Many VCRs also apply this AGC processing to signals that are merely passing through the VCR, even if you aren't recording

2) As an unrelated fact, analog video signals actually include the closed captioning data encoded into the video feed. This data is encoded into a part of the video stream that usually isn't displayed on your TV. However, sometimes you may see this data when playing back the analog signal on a digital display, if overscanning is turned off. If you've ever seen video with a row of black and white dots/bars at the top, that's the closed captioning data.

3) Along comes Macrovision. Some assholes discovered that if you manipulate the signal contained in the closed captioning data, you can often screw with the AGC mechanism in VCRs, causing it to repeatedly alter the video signal from brighter to darker. Also, because VCRs often apply this AGC to signals being passed through, this also explains why you usually couldn't hook up your DVD player to your VCR to get around the fact that your older TV didn't have RCA inputs.

So if you think about this, there is no reason why it should matter if the VCRs are the same brand. With any VCR, the signal it outputs is going to be the same, no matter whether hooked up to a TV, a VCR of the same brand, or of a different brand. Likewise, the input signal is going to be processed the same, no matter whether coming from a VCR of the same brand or different brand, a DVD player, a camcorder, or a cable box. The only thing that makes the difference is the implementation of AGC in the VCR. EitherA) Your VCR implements AGC in a manner that is susceptible to macrovision manipulationB) Your VCR implements AGC in a manner that ignores this extra data.C) Your VCR doesn't do AGC

If the VCR doing the recording falls into category A, then it won't work right. If the VCR falls into category B or C, then the macrovision won't have any effect on you. I think Occam would say that the simplest explanation would be that the VCRs you worked with fall into category B or C.

I haven't stayed current with DVDs, and haven't even tried Bluray. Have a Bluray drive in my computer, but it has never had a Bluray disc in it. Consequently, I have found the copy protection of recent DVDs not so trivial. I don't use DVDs any more myself, and this copy protection crap they pull makes me less willing than ever to get back into DVDs. It's a pain to read up on how they've screwed with DVDs in recent years, and track down the means to handle it when I try one and find it won't play on my Linux box. Only reason I even mess with it occassionally is for friends.

DeCSS and removal of region encoding isn't enough any more, have to deal with crud like this ARccOS protection. There are intentionally corrupt sectors that confuse old school DVD ripping software, fake titles that DVD players overlook as intended because their size is below the DVD standard's lower limit but which are picked up by DVD drives and software in computers, and corrupt video files with sizes set to 0x0 width and height, and lengths set to 0 seconds, and I think some screwing around with colors as well, to cause blank black screens. There's not much on Linux to handle that. MakeMKV does fairly well, but can't always produce files that can be burned to DVD. But I've heard the best software is AnyDVD, which is Windows only. Haven't tried it.

Do you think Netflix would offer every movie on streaming if they could? Of course they would.

But Netflix also wants to keep a reasonable flat rate for streaming, so they offer what they can and try to grow the user base so they have enough overall income to pay for more popular titles to be included.

Until the content providers budge on price it's really that simple. After all, you can get EVERY new movie on iTunes to rent or buy - for a cost that to me is WAY too high. So until then I keep the dual Netflix streaming/disc plan so I can get discs for the few movies released these days that are worth watching.

I agree. I deal with a lot of software publishers, and most of the old-timers are terrified of "the cloud". Want to run an app on a terminal server instead of installing on a couple hundred desktops? Get ready for a long discussion with Legal. More companies are starting to get it, but there are still a lot of holdouts. I expect content providers are the same: sure, they'll let you stream their old crap that's just clogging up the bargain bins, but there's no way they'll expose their shiny new releases to the horrors of "the cloud". It's a control thing, or rather the perception of control.

What you describe and reality are about 180 degrees opposite. The reality is that the older movies are DVD only. The newer stuff can be streamed.

My theory is that the newer releases are already digital and the distribution agreements are in place. To make the old DVDs available online someone would have to invest the time to shift them into digital format. Then there are the licensing agreements. Granted, licensing is a legal issue and not a technical one, but nobody is going to invest the time and money required to update the licensing terms for some obscure DVD that was released in 1997 because they know that fewer than a coupled hundred people are ever going to want to view it.

Some works are too obscure. This was one of the great selling points of Netflix back in the day. They were your corner rental shop but they serviced the entire country. A title that might be too obscure for your corner shop would not be too obscure for Netflix.

It's just like Amazon.

I've seen works available on DVD get "expired" from the Netflix streaming service.

Then there are some things that are even too obscure for Netflix. Sometimes these items are subject to a brutal resale market where collectors are

Yes. Netflix can rent physical DVDs without negotiating with studios or distributors. In theory, they could run to Walmart and buy DVDs to mail out. They need nobody''s permission to do this. With streaming, they are at the mercy of the studios. Studios who want to offer their own streaming services.

The death of DVDs could equal the death of Netflix. It may or may not play out like that, but DVDs have been very good to Netflix for the simple reason of not having to enter into any agreements to do their core business.

There are any number of entities that would love to see Netflix fold. The way to do that is through license fees. They can turn the screws.

Yes. Netflix can rent physical DVDs without negotiating with studios or distributors. In theory, they could run to Walmart and buy DVDs to mail out. They need nobody''s permission to do this.

I'm pretty sure this is incorrect. The consensus among lawyers here for example:http://www.avvo.com/legal-answ... [avvo.com]
is that it's not legal to buy a DVD from Walmart and rent it out. The movie rental companies that rent out DVDs have to pay a special higher price to buy the DVDs from the studios.

You're either a fucking idiot or a corporate stooge. The right of first sale (part of copyright law), says it is perfectly legal to rent your DVDs, CDs, books, etc.

Not quite. You can't rent or lend CDs, or records, or other "phonorecordings" without a license. It's a special case.

Citation? And I mean to a supreme court case or law, not to some blog or industry white paper.

The first sale principle was established by the supreme court and it says that when you pay money for something and are allowed to keep it forever without further compensation, you bought it regardless of anything written in the fine print. You can therefore do whatever you want with it, other than copy it or publicly broadcast it. You can certainly lend it out, for free or for a fee.

That's why I didn't write, "Why doesn't Netflix allow every movie to be checked out as a streamable virtual DVD?" because the answer is obviously "Because the content providers won't let them."

The question I actually asked in the 3rd paragraph was: "Why do movie studios allow Netflix to send out DVDs to their subscribers by mail, but not to allow the same option in the form of "virtual DVDs" [where the virtual DVDs include a monthly limit and a delay on "checking them out"?" That answer is not obvious.

"Why do movie studios allow Netflix to send out DVDs to their subscribers by mail, but not to allow the same option in the form of "virtual DVDs"

The answer is still obvious, they want money per movie to do that and Netflix doesn't want to do anything but a flat-rate charge. It's still the content providers demanding control over the pricing model.

iTunes does exactly what you are saying, you can rent a movie where you have a certain time in which to start watching it, and must finish 24 hours after you star

Also, I think the author fails to consider the idea that Netflix likes to keep things simple. If a move studio said "Netflix, you can license this movie for streaming, but only if it has the following limits on viewing..." or "...only if you charge an additional $___...," I think Netflix would say "No." Otherwise it would have to segregate its movies into categories with viewing limits and those without. And it would be a slippery slope. Some movies would have strict limits, others would get looser limi

On Amazon, it might come up when I search, but that doesn't mean it will be free, and if it isn't free, I probably won't watch it at all.

This is very annoying ting about Prime. I do not use the streaming function because it is frustrating in this way. The shipping savings are worth it, even with the cost raise just announced. If, that is, you do a lot of Amazon buying, which I do.

Mechanical, compulsory is easy licensing to deal with. Not really much restrictions on the distribution format. Sync licensing on the other hand gives the artist the right to dictate which methods of distribution are allowed. So if an artist says, "NO STREAMING" there will be no streaming.

And thus we expose why copyright is turning into a net loss for society. It simply is not in society's interest to allow the continued absolute control over venue. Copyright needs to find another mechanism besides controlling copying and distribution.

This is not an intellectually honest answer. Netflix is offering both the inconvenient "old" method and the "next" slightly more convenient method. Obviously, there are separate groups of people who are willing to trade price for convenience and vice versa. The two methods aren't both offered in the hope that you'll rent the DVD, then stream the same movie you already rented. In both instances, it's understood that you were only renting it for a limited time. You didn't "buy" media.

Everything about the --AA entertainment industry is purposely inconvenient. That way they can sell you the next, slightly more convenient version of the same content you already purchased.

Well, there is that, but it's mostly the studios and/or property owners who decided to issued the nth "Directors Cut/Whizzy Edition/Collectors Edition/Extended..." but you don't have to fall for that. Sometimes they are worthwhile, as many of the first James Bond DVDs were not genuine Widescreen, but cropped TV edition to look like it. Genuine Wide format was issued after they were embarrassingly caught (they should have been forced to buy back all the crap editions.)

After reading that whole blurb, I think this is the more plausible explanation. It isn't the movie companies limiting netflix, it's netflix limiting itself. They pay a certain price for those DVDs which become theirs to rent as they wish, but streaming (with no physical media to own) costs a license fee per stream.

But this isn't really an answer because it just begs the question of why they don't make the same arrangement with "virtual DVDs".

Let's say the studio sells Netflix a DVD of Dark Knight for $100. (Netflix can't just buy the DVD at Walmart for $10 and rent it out to their subscribers, they have to pay the special higher price for a DVD that can be rented out.) Netflix charges people to rent that DVD by mail, the studio makes money, Netflix makes money, everybody's happy.

Why doesn't the studio just say to Netflix: "Look, give us $100 and we'll grant you a license for a streamable 'virtual DVD' that can only be checked out to one subscriber at a time, and you can check it out as many times as you want. So users can check out the virtual DVD, or you'll also give them the option of the physical DVDs for users who prefer that. We'll still make all of the sales that we were making before, PLUS we will now be able to serve the additional market of people who watch movies on their tablets and phones and DVD-free laptops, so all parties involved make more money."

It's not obvious why the studios don't make some kind of arrangement like that. Price discrimination, based on the inconvenience of physical DVDs, is one possible explanation. There might be other explanations.

I work with a number of locations that lack any form of high speed internet. They have enough internet to facebook, order the DVDs, etc... but nowhere near enough bandwidth to actually stream the movies. The DVD-by-mail option is their only option, if netflix et al were to shut down this service, they would be very unhappy.

It's also hella expensive to stream shows for the rug rat in the back seat when we're on a road trip. Cheaper to give my money to Netflix than to ATT/VZW for the trips that i need to keep the little snot gobbler sedated so i don't go postal.

That's true, but I was really wondering why they don't offer the "virtual DVD" option in addition to physical DVDs. So they would keep all their existing customers who prefer physical DVDs, but then they would presumably also gain some additional customers who would prefer virtual DVDs (people who like watching movies on phones, or tablets or laptops without DVD drives).

> Specifically: Why do movie studios allow Netflix to send out DVDs to their subscribers by mail, but not to allow the same option in the form of "virtual DVDs" that you could "check out" through their website, and stream them while they're checked out to you?

They don't "let" Netflix do it. It's netflix's right to do so and the movie studios tried to stop them, just like they tried to stop VHS and Beta rentals when VHS gained traction in the late 70s/early 80s. The reason DVD and Blu-Ray remain so popular is that people want to OWN what they buy - they don't want to "license" it on a per-platform or per-device basis (which is why DIVX died), and they don't want the movie to disappear when the "seller"/"licensor" goes under or simply decides the business isn't profitable off and exits that industry vertical. I'm sure most consumers do not think it through that carefully but have a vague notion of the possibility.

And if they do buy a copy of the movie and want to take it to a friend's house and find that they cannot, then they learn and go back to physical media (or to unencumbered, ad-free "pirate" torrents).

And yes, you do OWN that copy you buy. Even the movie producers acknowledge this in advertising: "Own it on DVD or Blu-Ray today!!" They are very consistent about this, and it's known by them as well as thinking people that you OWN that copy of the movie (or album, or whatever) just as much as you OWN any book you buy- you're just forbidden from violating their exclusive distribution rights granted to them as the copyright holders through copyright law (or by contract with the actual copyright holders again via copyright law).

The DVD distribution method is established, if they switched to streaming investment would have to happen. That's Netflix' reason. But there's probably much more to it.

There's also that other aspect, where streaming is hard to reign in. When dealing with physical media, you can much more easily determine who gets them. And while it may not matter to Netflix, you may rest assured that it does matter big time to the various distributors who still maintain a form of territory protection. You may have noticed t

It would work globally like pirate bay, yes sir...In theory that arguments hold water, in practice they are shooting themselves in their own foot. If for instance, Apple could stream musics and movies for cents a pop, they would create a new model of business in itself where people would stop caring about buying bootleg copies or downloading them from the Internet. The thing is, they dont because they are greedy, and prefer to ignore the laws of demand and market, and instead bully their customer base into

The author is looking at this from a tech geek perspective, trying to find explanations in terms of mathematical or technological influences.

The first big flaw is the author is starting with the assumption that DVDs are less convenient then streaming 'for almost all users'. Only about a 3rd of the country have fixed broadband currently, meaning a significant number of people are poorly served by streaming right out of the gate.... so there is probably a bit of social group blinders going on there.

Moving away from that, I do not think the OP really appreciates how much of a pain in the butt dealing with the contract is. Studios often do not have the simple ability to wave a pen and allow DVDs to be streamed, the original rights were generally not drawn up to include that kind of availability and courts have already decided that 'we have the physical DVDs and stream/rent them out' technical solution does not get around the legal interpretations of streaming services.

That is not to say there is not politics and price fixing thrown in there, but you really can not skip over these two rather major factors and get a complete picture of why. If nothing else there is plenty of politics involved, studios would probably LOVE to stop Netflix renting out physical DVDs but they are legally unable to prevent that, and control over the order of release of a film is a huge deal to studios (it is debatable how much of it is purely circle-jerking power vs real economic benfit, but most people outside the industry are probably not going to have the background to really know).

If you go to other countries where the first sale doctrine doesn't apply (like Australia) you'll find the DVD and Streaming rental prices are about the same. I think the reason you see such a discrepancy here in the USA, is that once a company buys a DVD the copyright owner can no longer control its use. With a streaming rental, it is considered distribution and they do require licensing.

The content companies have won. The brainwashing in the schools over the past 20 years has succeeded.

We have a 1770 word essay why ownership of media is clunky and why it is ok to keep paying to watch shows for entertainment. Have we really come so far from the concept of sharing and owning media that we now have to subscribe to "physical media" = bad -> We should always just stream?.

Streaming inherently disavows your right to own media and to make it your own. The end is at hand..

Streaming should be an OPTION. DVD's should be an OPTION..

##AA Stooges should not be allowed to post such rubbish. And those that are now brainwashed should submit to de-programming..

The fact is the DVD train is long gone and nobody notices. Apple for instance no longer sells equipment with them. And when I had a computer with a DVD at work, I resented the extra weight it added to the machine. now then again, the absence of DVDs doesnt mean one-time streaming. One alternative is the iTunes store, if just they would price the movies in a sensible price, they could make millions and millions of sales. Another alternative are DivX/matroska and family.

I can use them any time I like. I can use them any place I like. I can use them on any device I like.

I don't have to worry about contracts expiring or crappy phone networks or landline ISP bandwidth caps.

I don't have to worry about how they have cropped the video or otherwise messed around with the source material.

Drives are large enough now that a decent media collection might not even span more than one drive. Shoved in a box, the originals won't take up any more space than anything else in the modern suburban lifestyle.

Clearly you have a problem with individuals retaining their personal property rights.

front page of Slashdot. Of course this is price discrimination. Charge what the market will bear. Segment your users accordingly. Maximize revenue through each avenue, carefully ensuring that you match value offered to segments to pricing, etc.

This is not a story, this is marketing 101—it's what every marketing-driven organization (basically everyone in the modern economy) does, and the bigger they are, the better they do it.

It's not that any of this is wrong, it's just not newsworthy. We could write the same piece about any number of consumer goods companies, SAAS platforms, etc.

Slashvertisement:You didn't see the blatant plug of "The Dark Knight Rises" along with the subtle subliminal record-setting use of the word DVD?

A better question is "who invented those caps in the laundry detergent?" The whole purpose is to prevent spillage with that strange shape and surface tension etc. But due to the impracticality of building a single-piece bottle with that shape, manufacturers just add the cap to the original bottle with some kind of adhesive. Since that adhesive appears to wear out

Well reading through the comments, it seems like most people think the explanation is something other than price discrimination. (i.e. a lot of people think that the real explanation is first sale doctrine -- Netflix can buy the DVDs from studios and rent them out without asking permission. I think this explanation is probably wrong because Netflix usually buys the DVDs from studios who know what Netflix plans on doing with them, so the argument that "the studios can't stop them" is fallacious -- the studios actually cooperate with Netflix. (This agreement sometimes breaks down, as with the John Carter DVD release, when Disney refused to sell Netflix the DVDs so Netflix just bought them retail and rented them out. This was legal, but it's not how it's usually done.)

But, in short, if most people don't realize that price discrimination is the explanation, then I think that makes it worthwhile to write an article positing that that is the explanation.

Digital streaming is without a doubt more convenient from a certain standpoint, especially a short term view. There are several reasons DVDs are important to some as well as a longer term view. For basic consumption it's great, not so much for ownership and control.

First, there's the human aspect to it. Many like to collect objects - from stones to Elvis memorabilia to various forms of culture and everything in between. There's a certain satisfaction to owning a physical object like a DVD or book. While it can be taken to unhealthy extremes, for most it's just a hobby.

Second there's the long term view. Digital streams, cloud based collections, etc are all temporary. No one owns anything and are at the mercy of corporations as to whether that item will stay viewable over the long term.

Third, not all services are created equal. While I can buy just about any DVD I'd care to, when it comes to Netflix the offerings are pathetic simply because I'm above the 49th parallel. I'd be paying the same amount for a fraction of the content simply due to my geography.

Thank you... I can't believe how many posts it took before someone mentioned this. "Only" 70-80% of the country has some form of internet or broadband, depending on who you ask... I bet the remaining 20+% account for more than their fair share of DVD users (I can't be sure, but still). Alienating that group is potentially bad for business.

Your first three points were very good as well... Ultimately, though, it's also about what people are willing to pay for. I don't really care WHY people are renting DVD

You have wal-mart, Best Buy and Barnes and Noble, Amazon, Redbox and other stores/physical places that continue to market DVDs.

Getting rid of the DVD market means that the marketing of movies falls from many stores to a *few* streaming providers which would give them far more leverage on pricing and distribution then Hollywood is ready to give up.

Also, streaming movies has relatively expensive up front costs requiring internet service and a decoder box plus an additional monthly fee that some people can't afford. (Let alone the older generation that can't figure out all that new-fangled GOOEY menu streaming stuff... and have enough problems just putting a disc in their DVD player!)

This constant harping on how great streaming is bugs me. While that may be true in urban cores,in the technological hinterlands we are lucky to *have any* Internet connections. When home,I have problems getting short YouTube videos to play at all (if they do play, I get long hangsevery few seconds). Last time I looked my choices were AT&T DSL (I to not think they can provideUverse to my home), Comcrap or Clear (which is what I have). I used to have AT&T for home phone,DSL and GoPhone cell service - I will *NEVER* willingly be an AT&T customer again if I can at all avoidit. And there is a reason I listed the 2nd choice as "Comcrap".

I have never had Netflix but if I were to sign up it would be only for their DVD service.

As is Ihave a large collection of DVDs in hand (TV shows, movies - lots of anime). So I do notfind them "clunky" at all.

Several other people have mentioned it, but there's a lot of off-decent-broadband people out there (get online via satellite or cell-stick). These rural households may only be 5-7% of the nation, but since you see red envelopes in *almost every* country house I'm ever in, it wouldn't surprise me if they make up 15-20% of Netflix's customer base.

When I see the commercials for new releases I put them in my DVD queue, Some amount of time (weeks) later they actually show up at my door and I'm pretty good about keeping my queue moving. Usually I put the disc back in the mail immediately after viewing.

But anyway, Netflix has a wait queue for new releases.

I always just assumed Netflix didn't put it all on streaming just to have a rental business. If there was a premium streaming option for the cost of DVD+streaming, I'd go for that, Fios/Comcast throttli

Check out how much some of your favorite artists make via spotify and the like. Of course I'd rather you buy my $15 CD than give me.00005 cents off a hundred plays. If that. The "long tail" is yet to be determined.

I can't imagine that streaming services such as Netflix pay that much to the studios, either, so of course the studios want you to buy the DVDs. If you can't wait for the streaming option, by golly, Best Buy will have it for $19.99 or $24.99 for the bluray on release date. I know many of you

Essentially, the studios allow the netflix DVD service because they have no legal right to disallow it. Some time ago it was ruled, in the US, that when you purchase a book, DVD, etc..., of a copyrighted work, that you physically own it like an object. At that point you are free to sell, rent, give away, destroy, keep, or whatever else you can legally do with an object that you own, regardless of the copyright holders exclusive distribution right. Netflix owns the DVDs, they rent them to you, movie studi

DVDs are "good" because you own them. You can "stream" them from your DVD player to your TV any time you want. Internet out? Grab a DVD off the shelf.

They are also low-barrier. Any granny can pay $100 for a DVD player (likely less) and have someone plug it in if they don't want to, but most RCA DVD players come with all the cabling, and it's all color coded. Granny doesn't need to figure out how to "stream" or anything. Doesn't have to buy a special Smart TV, or media device or computer. DVDs just work. You pick the one you want, put it in, and it starts playing (after 20 minutes of warning and advertisements).

"Unfortunately, by the very nature of these decoy-answer-making-a-deeper-mystery questions, if you ask them in a forum or on a mailing list, you'll get people spelling out the decoy answer for you with what they imagine to be the patience of someone talking to an idiot."

Except for the ones who don't / won't / can't stream. Not every Netflix user (or person on the planet, for that matter) knows how to, or likes to, or has the internet access or bandwidth to stream HD video.

That there is still some demand for DVDs to buy demonstrates this very clearly.

I've had an 8-at-a-time Netflix subscription since 2000 and I've been copying discs for that entire time. My goal is to touch a disc one time and Netflix facilitates that - I rip the disc and send it back. I don't mind doing it (at this point it's automated). My local copies tend to be better than the pirated product and it's not like my ISP is going to rat me out for doing it.In theory I can download faster than Netflix can mail me discs, but dealing with physical discs more or less eliminates the risk fac

All that blithering. The business isn't about DVD vs streaming. It's about metered flat rate (Netflix's 2 DVDs at a time) vs pay per item (Amazon, Google streaming).

Pricing models in the movie industry are an interesting subject, but the original poster clearly knows nothing about them. This has been discussed to death in the trades (The Hollywood Reporter and Variety). Hollywood is desperately trying to avoid commodization of movies, something that's already happened to music.

You seem to think that high speed internet access is universally available across the united states. I have news for you, it isn't. There are huge swaths of the country that don't have access to high speed internet at any price. In many places. That doesn't include the large number of people who can afford a DVD player but can't afford an internet connection, those who don't have a permanent residence, people like truck drivers who don't have access to internet most of the time, etc.

Bennett Haselton, you need to get out of your suburban ivory tower and experience life as so many do, without all the wonderful advantages you currently enjoy.

Not everyone has the high bandwidth connections. Streaming doesn't work in much of the USA and much of the world for that matter. There are many places where a DVD is much more convient to watch than to have the video streamed.

Another issue is that the streamed video from Amazon Prime for example does not include the extras like deleted scenes that are on DVDs.

I've been a NF user since they started(2004?) and have had a streaming plan with them since that was possible.
I can say unequivocally that their streaming performance has gone downhill to the point I'm considering cancelling and going back to the 3 DVD at a time plan.
I've called(yes you can do that...) NF several times to complain. I get the same excuses everytime, which boils down to "It's not our fault". I've contacted my ISP who shows that I've got the latest/g

DVDs are not less convenient. The picture quality is much worse with streaming, plus, many people do not have the fast internet connection needed for streaming. Its amazing how the article assumes that everyone has high speed internet. With some ISPs also enforcing download caps, this adds more trouble. Break-up of the picture is common, and if more than a few of your neighbors are trying to watch movies too, it just stops working. The following not relate to rentals, but you can have a used market for selling DVDs and Blu-ray disc while its very difficult for a used market to exist with streaming or files. Streaming doesnt give you your own copy of the movie at all. At least with a DVD i can pop it in at any time without having to pay a fee and get good picture quality. Blu-ray can provide picture quality that far surpasses what streaming can do with the internet connections most people have. Blu-ray has a HD picture which is always clean and beautiful, streaming for me almost always is filled with glitches, artifacts and poor picture quality.

The author seems to be unaware that in 2011 Netflix tried to spin off its DVD business (proposed spinoff "Qwikster") and focus on streaming-only. The outrage from its existing customer base forced it to reverse this plan and publicly apologize to its customers:

"It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” wrote Hastings. “That was certainly not our intent, and I offer my sincere apology.”

I have a so-called 30Mbps connection, that only hits those speeds on a speed test. Netflix rarely sends an HD picture, and I've never seen their Super HD. But Blu-Ray is 30Mbps of high-quality video and uncompressed audio that just works.

As a long time Netflix subscriber (maybe 10 years - going back to when it was 3 DVDs at a time for $14.99 and no streaming option) - I'd say the answer to the headline is "no."

Reed Hastings claims that high-speed internet streaming was always his plan for Netflix - they just had to wait for the technology to catch up. While they were waiting, Netflix had to fight off competition from Wal-Mart (Netflix bought them out) and Blockbuster (who probably wish Netflix had bought them out) in the "DVD by mail" space. When they first rolled out the "streaming" option, the movies available for streaming were not good (but streaming was a free add on - so it didn't really matter).

When streaming became a viable option, the big problem Netflix ran into was Netflix ("We have met the enemy and they are us"). They tried to raise the monthly fee and people bolted for the door (800,000 members quickly gone). Netflix said "oops!" and decided to split into two services (Anybody remember "Quickster?"), which people also hated - so we got something like the current price structure.

So, no DVDs are not inconvenient on purpose, and won't go away anytime soon. Netflix arrived at its pricing structure by responding to market forces. Streaming content is the future (and the future is now!) - which means licensing agreements with content creators/providers will surpass "hard copy" sales (if they haven't already).

...and if you are colecting marketing data for Netflix: I'm a streaming only customer. I "rent"/stream a lot of just released movies from Amazon.com (had a problem with the 30 day wait time for DVD new releases from Netflix - but if I could get new movies the week they are released on DVD I'd go back)...

This is the single stupidest, most presumptuous, idiotic thing I have ever read on/. that wasn't in the comments section - and it still vies for the top spot, even including them.

I started to write a complex response, but then realized that it would be asinine to give this drivel that much of my time when I can sum it up very easily:

Asking this idiotic question and not realizing the dozens of factors from quality (1080p streaming does not = 1080p Blu-ray, unless you are watching all your content on a tiny laptop screen), to the fact this AYCE streaming-world is mostly unique to the US and won't be sustainable here once Internet caps are in place for most folks (which anyone who follows such things knows is coming), and everything in between, is akin to someone posting an article saying, "Why doesn't everyone just cook with a microwave since it's the simplest, most convenient way to cook food?"

Though, it should have been obvious the writer was a tool from the first sentence - if you are idiotic enough to buy a laptop from Best Buy of all places, you don't have much sense to begin with.

iTunes is only useful for apple people.So I will complain about it, Netflix works on my TiVo, my PS3, my android phone, my android tablet, my computer, etc.iTunes only works on my computer, if I have it installed. And since iTunes insists on installing all these extra services that don't do me any good, I don'thave it installed.

.. netflix also works on any modern SmartTV, xbox, a fricking $35 chromecast dongle, Rokus and any number of other media boxes. It runs on pretty much anything with internet connection and RCA/HDMI connectorhttps://www.netflix.com/Watch?... [netflix.com]

Even Amazon VOD and Vudu have more cross platform clients than iTunes.

Since the Walled Garden makes pricing information a state secret, it's kind of hard too really. At least with Amazon, I can see if any given new movie can be "rented". All I need is a standard web browser. It doesn't matter if my display platform is supported or not.

Although the idea that a DVD is "clunky", is just mindless elitist claptrap. You stick it in the device and it plays. That's fairly simple really. If not for compulsory ads, there would be no real reason to seek out something else for a rental.

Streaming services and Virtual Jukeboxes are more advantageous for things you are going to watch more than once.

In the rural valley I lived up until last year, my Internet was provided by cellular modem or MiFi - The only alternative was satellite, and the latency of satellite prevents VPN usage that I need for work. The MiFi comes with a 10GB cap, which is fine for most of my home and business usage. But 10GB is about 3 streamed movies. So I buy DVDs instead.

Our library even allow us to rent virtual book and virtual dvds; were we get to download the book or dvd immediatly, and we return it when we don`t need it anymore or it`s done automatically after a week, doing exactly what netflix isn't doing and the user is complaining about. Personnaly, I'm using only the books so far since the offering is mostly french and I favor watching a movie in it`s original language, and french books are what`s harder to find with other means. Still, it`s a great way to get the l

This. The reason Netflix was able to build an empire on DVDs is that they didn't have to ask permission from every studio to do it. They just bought the DVDs and put them in the mail. This is also why the streaming selection sucks, because media companies wrote the laws for streaming, and Netflix has to put their balls directly in their hands and ask how hard they want to squeeze. The situation won't improve without a major overhaul in copyright law, which is absolutely not going to happen anytime soon. If anything, Congress will make the laws even more restrictive/stupid because that's what they're getting paid to do.

I found some posts from intellectual property attorneys and they seem to be saying that you can't just buy a DVD at Walmart and rent it out:http://www.avvo.com/legal-answ... [avvo.com]
Interestingly though the answers from the IP lawyers seem to be split.